The Alliance for Integrity & Reform of 340B (AIR340B) published a fact sheet, indicating 340B hospitals in California show a pattern of extensive contract pharmacy activity, below-average charity care at many facilities, and 340B-related profits that can outpace direct support for vulnerable patients.
The 340B program was created to help eligible safety-net providers stretch federal resources and serve more patients, but its financial footprint has expanded significantly. Covered entities bought $81.4 billion in outpatient drugs through the program in calendar year 2024, according to the Health Resources & Services Administration. That makes 340B one of the largest federal drug-purchasing channels — and raises questions about who benefits from it.
California 340B hospitals have 3,514 contract pharmacy arrangements, and 40% are with out-of-state pharmacies. The state page also lists Ronald Reagan UCLA Medical Center with 134 contracts, of which 40% are outside California, adding hospital-level detail to the contract pharmacy footprint described on the page.
The topic has drawn attention from policymakers. On Feb. 2, Senate Health, Education, Labor and Pensions Committee Chair Bill Cassidy said a “serious lack of transparency” in the 340B drug program prevents discounts from translating into “better access or lower costs for patients.” He requested information from Apexus, the 340B prime vendor, regarding how it generates revenue and structures its business practices.
79% of California hospitals provide below-average levels of charity care, and Stanford Health Care devotes 0.2% of operating costs to charity care. California 340B hospitals earn 3.6 times more in 340B profits than they spend on charity care, and UCSF Health earns $30 million in annual profits.
AIR340B describes itself as a coalition focused on strengthening and sustaining the 340B program so it supports vulnerable, uninsured, and indigent patients in line with the program’s original goals. Its stated priorities include tighter transparency, accountability, and oversight, along with a stronger safety-net focus for participating entities.
